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Disrupted Parts Supply Brings Halt to Hyundai Motor’s Factories in China
Due to Sluggish Sales
Disrupted Parts Supply Brings Halt to Hyundai Motor’s Factories in China
  • By Michael Herh
  • August 29, 2017, 16:45
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Hyundai Motor's three Chinese plants suspended operations as its parts suppliers stopped supplying parts to the plants.
Hyundai Motor's three Chinese plants suspended operations as its parts suppliers stopped supplying parts to the plants.

 

Hyundai Motor's three Chinese plants suspended operations. This is because parts suppliers stopped supplying parts to the plants as they delayed payments to local parts makers due to sluggish sales stemming from China’s retaliations against South Korean companies for South Korea’s deployment of the terminal high altitude area defense (THAAD) system.

According to Hyundai Motor on August 29, since last week, a brake was put on the operation of three of four factories of Beijing Hyundai, a Hyundai Motor joint venture in China.

The factories suddenly stopped operating because the local parts company refused to deliver. A French-Chinese joint venture company which supplies plastic fuel tanks to Hyundai Motor Co. has stopped delivering products to Hyundai Motor due to a delay in payment. The company is a Chinese joint venture of French company Plastics Omnium. It was reported that the company did not receive payments of 111 million yuan from Beijing Hyundai as of August 25. 68% of the company’s total sales come from Beijing Hyundai.

"Because fuel tanks are an essential part of cars, it is difficult to resume operation if they are not supplied," a Hyundai Motor official said.

Hyundai's sales in China in the first half of the year have been halved since China began to retaliate South Korea over the latter’s deployment of the terminal high altitude area defense (THAAD) system on a full scale in March of this year. The automaker lowered its Chinese sales target for this year from 1.25 million units to 800,000 units. If Hyundai Motor sells 500,000 units in the second half, the automaker can reach its goal of 800,000 units. But it will be a big challenge to sell 500,000 units in the second half due to the suspension of factory operations.